An economics lesson from Ron Paul: Inflation is theft

[sailingaway]

http://communities.washingtontimes.com/neighborhood/making-waves-hawaii-perspective-washington-politic/2012/may/2/economics-lesson-ron-paul-inflation-theft/

[ababba]

The argument is often not correctly stated. Inflation is a tax more on holdings of currency. Rates of return on savings invested increase with the rate of expected inflation.

Of course the biggest holders of US currency are foreigners and criminals. It doesn't seem terrible to have a moderate tax of foreigners and criminals.

[Tyler_Durden]

"Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged." - Ron Paul, April 25, 2006

[ababba]

"Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged." - Ron Paul, April 25, 2006

That's just not true. The rich hold much more currency than the poor. In addition, the biggest holders of currency are foreigners and criminals. Even if you believe inflation is a tax on savings, the poor do not save very much, even as a fraction of their income. Instead, they tend to have a lot of debt. Inflation can often be good for people with a lot of debt if the inflation is unanticipated.

[Jovan Galtic]

That's just not true. The rich hold much more currency than the poor. In addition, the biggest holders of currency are foreigners and criminals. Even if you believe inflation is a tax on savings, the poor do not save very much, even as a fraction of their income. Instead, they tend to have a lot of debt. Inflation can often be good for people with a lot of debt if the inflation is unanticipated.

Huh, not true.

First, the rich are first to get new currency while prices are still not inflated. Second, they keep most of their wealth in assets - companies, real estate etc. - which don't lose value. If careful, not even they are not hurt by monetary inflation, they can gain a lot from it (especially if close to the gov).

[sailingaway]

Huh, not true.

First, the rich are first to get new currency while prices are still not inflated. Second, they keep most of their wealth in assets - companies, real estate etc. - which don't lose value. If careful, not even they are not hurt by monetary inflation, they can gain a lot from it (especially if close to the gov).

also, the poor are already at subsistence level, and dependency is not a dignified alternative.

[Crystallas]

Huh, not true.

First, the rich are first to get new currency while prices are still not inflated. Second, they keep most of their wealth in assets - companies, real estate etc. - which don't lose value. If careful, not even they are not hurt by monetary inflation, they can gain a lot from it (especially if close to the gov).

QFT

[Jovan Galtic]

Here is one interesting interview:


http://www.youtube.com/watch?v=U9qr9ssUCrU

Notice how it always goes together with wars and destruction.

[ababba]

Huh, not true.

First, the rich are first to get new currency while prices are still not inflated. Second, they keep most of their wealth in assets - companies, real estate etc. - which don't lose value. If careful, not even they are not hurt by monetary inflation, they can gain a lot from it (especially if close to the gov).

The Federal reserve exchanges money for bonds so getting the money first is a joke because the bank that got the money gave up a bond that they were willing to either buy or sell within a very narrow range of basis points. Its not like the money is just given away. It is exchanged for an asset that the bank is willing to buy or sell.

The poor simply do not hold nominal bonds, but hold a lot of nominal debt. Your arguments about the assets of the rich explain why the rich are not hurt as much as they could be by inflation. It doesn't explain why the poor are hurt. They aren't because they don't hold much currency and they hold a lot of nominal debt.

Foreigners and criminals are hurt the most by inflation. No one ever responds to this point.

[Jovan Galtic]

Poor earn, for example, $1,000 each month and spend most of it on basic necessities like food, gas etc. Now imagine what happens if gas gets to $100/g and milk to $50/g. I would say that hurts...

It is true that foreigners would get hurt and they would be very pissed. I am not that worried about criminals, they will be first to switch to alternative currencies and take over the emerging black market.

I am not an expert though, just have some real life experience living through a somewhat similar events as my brother Milos explains in the video above.

[G-Wohl]

The poor simply do not hold nominal bonds, but hold a lot of nominal debt. Your arguments about the assets of the rich explain why the rich are not hurt as much as they could be by inflation. It doesn't explain why the poor are hurt. They aren't because they don't hold much currency and they hold a lot of nominal debt.

Foreigners and criminals are hurt the most by inflation. No one ever responds to this point.

What does it matter how much currency the poor hold? The currency that the poor *do* hold is still losing value, and that is going to be, dollar for dollar, a lot more of a hit to them than to a wealthy individual who has a diversified investment portfolio.

Your point about "foreigners and criminals" being hurt most by inflation is really not something that can be responded to; it's a subjective statement that borders on anti-conceptual. I would argue that "criminals," such as drug dealers who are capable of holding huge amounts of cash, are usually funneling those earnings into what are commonly referred to as "fronts" .... other businesses or ventures that make their earnings look normal to the IRS. And foreigners don't *have* to use USD-denominated assets as investment tools, whereas Americans are forced to use the greenback to make their purchases. And it is, of course, the standard by which we assess all value in our country - by law. So I suggest that the people who get "hurt most by inflation" are those Americans whose savings are denominated in USD at American banks. Poor and middle class Americans fall under this broad category more-so than foreign investors or powerful criminals.

[socal]

ababba

Your analysis is too simplistic. Total US currency in circulation is only about $1 trillion, but marketable Treasury debt is about 10 times as large, and the yield on short term Treasuries is close to zero. So fixating on currency is not the correct approach.

Secondly interest rates are being suppressed by the Federal Reserve and savers are not getting a fair return on any instrument tied to Treasury yields.

It's not useful to make a comprehensive list of all the winners and losers, but the big banks with access to zero interest rate loans who then buy higher yielding Treasuries are making risk free profits. And the bank bondholders who got bailed out were obviously winners. People with knowledge and capital who have access to inexpensive credit can also make a decent return. Losers would include the elderly on social security whose payments are not keeping up with inflation, debtors who lost their homes, and the poor with high interest rate credit card debt.

Daniel Amerman has some good articles explaining what's going on in more detail, here's one:

Financial Repression: A Sheep Shearing Instruction Manual
http://danielamerman.com/articles/2011/RepressionA.htm



As we will explore in this article, the essence of Financial Repression is using a combination of inflation and government control of interest rates in an environment of capital controls to confiscate the value of the savings of the world's savers. Rephrased in less academic terms - the government deliberately destroys the value of money over time, and uses regulations to force a negative rate of return onto investors in inflation-adjusted terms, so that the real wealth of savers shrinks by an average of 3-4% per year (in the postwar historical example), and it uses an assortment of carrots and sticks to make sure investors have no choice but to accept having the purchasing power of their investments shrink each year...

In a theoretical world, some would say that governments can't inflate away debts because the free market would demand interest rates that compensate them for the higher rate of inflation. Sadly, this theoretical world has little to do with the past or present real world...

[Danan]

The Federal reserve exchanges money for bonds so getting the money first is a joke because the bank that got the money gave up a bond that they were willing to either buy or sell within a very narrow range of basis points. Its not like the money is just given away. It is exchanged for an asset that the bank is willing to buy or sell.

The poor simply do not hold nominal bonds, but hold a lot of nominal debt. Your arguments about the assets of the rich explain why the rich are not hurt as much as they could be by inflation. It doesn't explain why the poor are hurt. They aren't because they don't hold much currency and they hold a lot of nominal debt.

Foreigners and criminals are hurt the most by inflation. No one ever responds to this point.

People on fixed income are hurt the most, because their income doesn't gow up with inflation (respectively: the adjustment always lacks a year behind).

Business owners are hurt less, since they can adjust their prices immediately when their costs go up. Although higher prices (while most costumers still have their old income) do affect them too because it lowers demand and thus decreases their profits.


In economics there are very few lose-lose-situations - so who's the winner of inflation?

In case of directly government driven inflation it are government contractors, workers and so on whose programms couldn't exist without inflation.

But that's not even very much compared with the most important factor that drives inflation - fractional reserve banking (which is in itself only "sustainable" through the FED and governmental deposit insurance) . And in this case the profiteers are the ones who get hold of the newly created money first. The banks themselves benefited from this method a great deal.

[tfurrh]

Inflation calculator: http://data.bls.gov/cgi-bin/cpicalc.pl

[ababba]

What does it matter how much currency the poor hold? The currency that the poor *do* hold is still losing value, and that is going to be, dollar for dollar, a lot more of a hit to them than to a wealthy individual who has a diversified investment portfolio.

Your point about "foreigners and criminals" being hurt most by inflation is really not something that can be responded to; it's a subjective statement that borders on anti-conceptual. I would argue that "criminals," such as drug dealers who are capable of holding huge amounts of cash, are usually funneling those earnings into what are commonly referred to as "fronts" .... other businesses or ventures that make their earnings look normal to the IRS. And foreigners don't *have* to use USD-denominated assets as investment tools, whereas Americans are forced to use the greenback to make their purchases. And it is, of course, the standard by which we assess all value in our country - by law. So I suggest that the people who get "hurt most by inflation" are those Americans whose savings are denominated in USD at American banks. Poor and middle class Americans fall under this broad category more-so than foreign investors or powerful criminals.

It matters that the poor never hold a large amount of assets relative to their income. Since they live month to month and never have a lot of savings, the inflation tax doesn't hurt them very much. We have to look at the people who have a large currency or checking account balance relative to their income.

[ababba]

ababba

Your analysis is too simplistic. Total US currency in circulation is only about $1 trillion, but marketable Treasury debt is about 10 times as large, and the yield on short term Treasuries is close to zero. So fixating on currency is not the correct approach.

Secondly interest rates are being suppressed by the Federal Reserve and savers are not getting a fair return on any instrument tied to Treasury yields.

It's not useful to make a comprehensive list of all the winners and losers, but the big banks with access to zero interest rate loans who then buy higher yielding Treasuries are making risk free profits. And the bank bondholders who got bailed out were obviously winners. People with knowledge and capital who have access to inexpensive credit can also make a decent return. Losers would include the elderly on social security whose payments are not keeping up with inflation, debtors who lost their homes, and the poor with high interest rate credit card debt.

Daniel Amerman has some good articles explaining what's going on in more detail, here's one:

Financial Repression: A Sheep Shearing Instruction Manual
http://danielamerman.com/articles/2011/RepressionA.htm

The interest rates are market clearing interest rates.

The Federal reserve sets the interest rate by adjusting the money supply to make markets for loanable funds clear at the interest rate they want. At that interest rate, there are no savers that want to save at that interest rate that cannot and their are no (risk adjusted) borrowers that want to borrow at that interest rate that cannot.

This is different than a price floor or ceiling on rents, when the government literally sets the price of rental housing. A price ceiling creates excess demand for housing. More people want housing than is supplied at the set price.

[The Gold Standard]

How much cash poor people "hold" is completely irrelevant. They are living paycheck to paycheck, which means every paycheck has value stolen from it, which is why they are hurt the most. It still doesn't matter. It is immoral to steal from poor and rich.

[NIU Students for Liberty]

It matters that the poor never hold a large amount of assets relative to their income. Since they live month to month and never have a lot of savings, the inflation tax doesn't hurt them very much. We have to look at the people who have a large currency or checking account balance relative to their income.

So the poor are not affected by rising prices, especially if they are living paycheck to paycheck with next to nothing in savings? Do they not purchase food, clothing, gas, etc?

[J_White]

this is good !


Inflation calculator: http://data.bls.gov/cgi-bin/cpicalc.pl

[thesnake742]

So the poor are not affected by rising prices, especially if they are living paycheck to paycheck with next to nothing in savings? Do they not purchase food, clothing, gas, etc?

I believe the rationale is that wages increase along with prices. So money earned always has a similar relative purchasing power, while it depreciates the longer you hold it.

[ababba]

Yes, the idea is that in the long-run, wages are linked to productivity, or the value that workers add to firms. If prices increase, the dollar value of the goods they are producing increase as well and they will be paid more. This is the idea that the real wage is linked to the marginal product of labor.

In the short-run, some people think that wages may be sticky, so that a surprisingly high inflation will actually lower real wages. However, right now slightly lower real wages for low skilled workers would not be terrible because it would partially alleviate the unemployment problem. Nominal wage cuts are very difficult for firms, so many firms might fire one of their 20 workers instead of lowering the wages of everyone by 5% or something similar. A 5% increase in inflation takes care of this problem, as the firm can keep all 20 workers with constant nominal wages. In this sense, inflation can actually be very helpful to the people in the worst position, the unemployed.

[RabbitMan]

Just wanted to butt in for a moment. Regardless of how much the poor and middle-class save on some statistic, the fact that long-term saving simply isn't an option means that they are unable to lift themselves out of their situation through thrift and hard-work. I would love to begin saving money for my future retirement--but unless I put my excess wages into some confusing financial plan run by an investment firm that gambles on the stock market, I am wasting my time.

If I had stashed a $100 bill in my mattress in 1992, it would have lost close to 40% of its value by 2012. Steady, minor inflation seems safe on paper, but it builds up a lot quicker than you think and prevents actual savings from occurring. The only way to even keep up is to throw your money into a messed up system. This is theft, no ifs, ands, or buts about it. Why would poor people save if they are only going to get shafted?

The problem is simple, but the solution is complex to wrap your (or at least my) head around. The more I think about it, the more it honestly seems like the whole system would need to undergo change, with ridding ourselves of fractional reserve banking, abolishing the federal reserve, etc.. It's kind of scary. But let's make no bones about it; inflation is bad, bad, BAD for the common man.

[jointhefightforfreedom]

This is all an after effect argument.

What about the fact that income tax on my personal wages or labor or property is theft period no matter my level of wealth or income.

The education this country needs especially our children is the very basic principles of liberty and how and why the USA was formed.

Freedom of religion
Right to own property of any kind and freedom from a 50%+ tax from King George.

With all the taxes we all pay now we are getting really screwed compared to the 50% prior to US independence!

40% of every dollar printed is debt. so basically 40% tax as soon as money is printed.
then what 20-35% income tax brackets.

Then hear is the WTF list!

1. Accounts Receivable Tax
2. Accounting and Tax Preparation (cost to taxpayers $300 billion)
3. Accumulated Earnings Tax
4. Accumulation Distribution of Trusts
5. Activity Fee (Dumping Permit Fee)
6 . Air Tax (PA coin-operated vacuums)
7. Aircraft Jet Fuel Tax
8. Aircraft Excise Tax
9 . Alcohol Fuels Tax
10. Alcoholic Beverage Tax
11. Alternative Minimum Tax – Amt
12. Ambulance Services (Air Ambulance Services, SD)
13. Ammunition Tax
14. Amusement Tax (MA, VA, MD)
15. Animal Slaughter Tax (WI, others, Per Animal)
16. Annual Custodial Fees (Ira Accounts)
17. Ballast Water Management Fee (Marine Invasive Species)
18. Biodiesel Fuel Tax
19. Blueberry Tax (Maine)
20. Bribe Taxes (Pay If You Dare)
21. Brothel licensing fees
22. Building Permit Tax
23. Capital Gains Tax
24. California Interstate User Diesel Fuel Tax
25. California Redemption Value (Can and Bottle Tax)
26. CDL License Tax
27. Charter Boat Captain License
28. Childhood Lead Poisoning Prevention Fee
29. Cigarette Tax
30. Cigarette Tax Stamp (Acts) (Distributors)
31. Compressed Natural Gas Tax
32. Commercial Activity Tax (OH – for Service Providers)
33. Corporate Income Tax
34. Court Fines (Indirect Taxes)
35. County Property Tax
36. Disposable Diapers Tax (Wisconsin)
37. Disposal Fee (Any Landfill Dumping)
38. Dog License Tax
39. Duck Hunting Tax Stamp (PA, others)
40. Electronic Waste Recycling Fee (E-Waste)
41. Emergency Telephone User Surcharge
42. Environmental Fee (CA – HazMat Fees)
43. Estate Tax (Death Tax, to be reinstated)
44. Excise Taxes
45. Facility Fee (CA – HazMat Fees)
46. FDIC tax (insurance premium on bank deposits)
47. Federal Income Tax
48. Federal Unemployment Tax (FUTA)
49. Fiduciary Income Tax (Estates and Trusts)
50. Fishing License Tax
51. Flush Tax (MD Tax For Producing Wastewater)
52. Food License Tax
53. Fountain Soda Drink Tax (Chicago – 9%)
54. Franchise Tax
55. Fresh Fruit (CA, if Purchased From A Vending Machine)
56. Fuel Gross Receipts Tax (Retail/Distributor)
57. Fuel Permit Tax
58. Fur Clothing Tax (MN)
59. Garbage Tax
60. Gasoline Tax (475 Cents Per Gallon)
61. Generation-Skipping Transfer Tax
62. Generator Fee (Recycled Waste Fee)
63. Gift Tax
64. Gross Receipts Tax
65. Habitat Stamp (Hunting/Fishing in some states)
66. Hamburger Tax
67. Hazardous Substances Fees: Generator, Facility, Disposal
68. Highway Access Fee
69. Household Employment Taxes
70. Hunting License Tax
71. Illegal Drug Possession (No Carolina)
72. Individual Income Tax
73. Inheritance Tax
74. Insect Control Hazardous Materials License
75. Insurance Premium Tax
76. Intangible Tax (Leases Of Govt. Owned Real Property)
77. Integrated Waste Management Fee
78. Interstate User Diesel Fuel Tax
79. Inventory Tax
80. IRA Rollover Tax (a transfer of IRA money)
81. IRA Early Withdrawal Tax
82. IRS Interest Charges
83. IRS Penalties (Tax On Top Of Tax)
84. Jock Tax (income earned by athletes in some states)
85. Kerosene, Distillate, & Stove Oil Taxes
86. Kiddie Tax (Child’s Earned Interest Form 8615)
87. Land Gains and Real Estate Withholding
88. Lead Poisoning Prevention Fee (Occupational)
89. Lease Severance Tax
90. Library Tax
91. Liquid Natural Gas Tax
92. Liquid Petroleum Gas Tax
93. Liquor Tax
94. Litigation Tax (TN Imposes Varies With the Offense)
95. LLC/PLLC Corporate Registration Tax
96. Local Income Tax
97. Lodging Taxes
98. Lump-Sum Distributions
99. Luxury Taxes
100. Make-Up Tax (Ohio, applying in a salon is taxable)
101. Marriage License Tax
102. Meal Tax
103. Medicare Tax
104. Mello-Roos Taxes (Special Taxes and Assessments)
105. Migratory Waterfowl Stamp (addition to hunting license)
106. Minnow Dealers License (Retail – For One Shop)
107. Minnow Dealers License (Distributor – For One+ Shops)
108. Mobile Home Ad Valorem Taxes
109. Motor Fuel Tax (For Suppliers)
110. Motor Vehicle Tax
111. Music and Dramatic Performing Rights Tax
112. Nudity Tax (Utah)
113. Nursery Registration (Buying and selling plants)
114. Occupancy Inspection Fees
115. Occupation Taxes and Fees (Various Professional Fees)
116. Oil and Gas Assessment Tax
117. Oil Spill Response, Prevention, and Administration Fee
118. Parking Space Taxes
119. Pass-Through Withholding
120. Pay-Phone Calls Tax (Indiana)
121. Percolation Test Fee
122. Personal Property Tax
123. Personal Holding Company (undistributed earnings)
124. Pest Control License
125. Petroleum Business Tax
126. Playing Card Tax (Al)
127. Pole Tax (TX – A $5 Cover Charge On Strip Clubs)
128. Profit from Illegal Drug Dealing
129. Property Tax
130. Property Transfer Tax (DE, ownership transfer between parties)
131. Prostitution Tax (NV – Prostitute Work Permits)
132. Poultry Registered Premises License (Sales License)
133. Rain Water Tax (Runoff after a Storm)
134. Rat Control Fee (CA)
135. Real Estate Tax
136. Recreational Vehicle Tax
137. Refrigerator and Freezer Recycling Fees
138. Regional Transit Taxing Authority (Trains)
139. Road Usage Tax
140. Room Tax (Hotel Rooms)
141. Sales Tax (State)
142. Sales Tax (City)
143. Sales And Use Tax (Sellers Permit)
144. School Tax
145. Service Charge Tax
146. Self Employment Tax
147. Septic And Drain Field Inspection Fees
148. Sex Sales Tax (UT, when nude people perform services)
149. Sewer & Water Tax
150. Social Security Tax
151. Sparkler and Novelties Tax (WV Sellers of Sparklers, etc)
152. Special Assessment Tax (Not Ad Valorem)
153. State Documentary Stamp Tax on Notes (FL RE Tax)
154. State Franchise Tax
155. State Income Tax
156. State Park Fees
157. State Unemployment Tax (SUTA)
158. Straight Vegetable Oil (SVO) Fuel Tax
159. Stud Fees (Kentucky’s Thoroughbred Sex Tax)
160. Tangible Personal Property Tax
161. Tattoo Tax (AR Tax On Tattoos)
162. Telephone 911 Service Tax (some states)
163. Telephone Federal Excise Tax
164. Telephone Federal Universal Service Fee Tax
165. Telephone Federal Surcharge Taxes
166. Telephone State Surcharge Taxes
167. Telephone Local Surcharge Taxes
168. Telephone Minimum Usage Surcharge Tax
169. Telephone Recurring Charges Tax
170. Telephone Universal Access Tax
171. Telephone Non-Recurring Charges Tax
172. Telephone State Usage Charge Tax
173. Telephone Local Usage Charge Tax
174. Tire Recycling Fee
175. Tobacco Tax (Cigar, Pipe, Consumer Tax)
176. Tobacco Tax (Cigar, Pipe, Dealer Tax)
177. Toll Road Taxes
178. Toll Bridge Taxes
179. Toll Tunnel Taxes
180. Tourism or Concession License Fee
181. Traffic Fines (Indirect Taxation)
182. Transportable Treatment Unit Fee (Small Facility)
183. Trailer Registration Tax
184. Trout Stamp (Addendum To Fish License)
185. Use Taxes (On Out-Of-State Purchases)
186. Utility Taxes
187. Unemployment Tax
188. Underground Storage Tank Maintenance Fee
189. Underpayment of Estimated Tax (Form 2210)
190. Unreported Tip Income (Social Security and Medicare Tax)
191. Vehicle License
192. Vehicle Recovery Tax (CO, to find stolen cars)
193. Vehicle Registration Tax
194. Vehicle Sales Tax
195. Wagering Tax (Tax on Gambling Winnings)
196. Waste Vegetable Oil (WVO) Fuel Tax
197. Water Rights Fee
198. Watercraft Registration Tax
199. Waterfowl Stamp Tax
200. Well Permit Tax
201. Wiring Inspection Fees
202. Workers Compensation Tax

[jointhefightforfreedom]

How Many Federal Regulations are There?
According to the Office of the Federal Register, in 1998, the Code of Federal Regulations (CFR), the official listing of all regulations in effect, contained a total of 134,723 pages in 201 volumes that claimed 19 feet of shelf space. In 1970, the CFR totaled only 54,834 pages.

The General Accountability Office (GAO) reports that in the four fiscal years from 1996 to 1999, a total of 15,286 new federal regulations went into effect. Of these, 222 were classified as "major" rules, each one having an annual effect on the economy of at least $100 million.

An Incredible Contrast

When the laws of the United States were codified as the United States Code in 1925, all of the titles combined occupied a single volume.

[idiom]

It matters that the poor never hold a large amount of assets relative to their income. Since they live month to month and never have a lot of savings, the inflation tax doesn't hurt them very much. We have to look at the people who have a large currency or checking account balance relative to their income.

Its a good thing they get a raise from month to month.

Also, the poor and the middle class *currently* don't keep savings because inflation is to fast for it to be useful. You can't scrimp and save your way out of a hole, the way you may have a hundred years ago, because the savings get eaten.

[Austrian Econ Disciple]

The Federal reserve exchanges money for bonds so getting the money first is a joke because the bank that got the money gave up a bond that they were willing to either buy or sell within a very narrow range of basis points. Its not like the money is just given away. It is exchanged for an asset that the bank is willing to buy or sell.

The poor simply do not hold nominal bonds, but hold a lot of nominal debt. Your arguments about the assets of the rich explain why the rich are not hurt as much as they could be by inflation. It doesn't explain why the poor are hurt. They aren't because they don't hold much currency and they hold a lot of nominal debt.

Foreigners and criminals are hurt the most by inflation. No one ever responds to this point.

You have no idea what the hell you are talking about. The poor aren't hurt by rising prices? Wages never keep pace with inflation, and as Cantillon taught us, inflation benefits certain folks (those who receive the money first, which means those politically connected) in lieu of destroying others (those who receive the new money last). In every case inflation makes the rich even richer at the expense of impoverishing the middle and destitute even more. It is a redistribution of wealth, a heinous one at that because most people have no understanding of the effects of inflation.

Yes, the money is given away in a lot of cases (you think a stealth bomber is actually worth billions?)? What about subsidies? Bailouts?

[socal]

The interest rates are market clearing interest rates. The Federal reserve sets the interest rate by adjusting the money supply to make markets for loanable funds clear at the interest rate they want. At that interest rate, there are no savers that want to save at that interest rate that cannot and their are no (risk adjusted) borrowers that want to borrow at that interest rate that cannot.

This is different than a price floor or ceiling on rents, when the government literally sets the price of rental housing. A price ceiling creates excess demand for housing. More people want housing than is supplied at the set price.
The mechanisms the Fed uses to lower interest rates are different and more complex than a price ceiling on rents, but they're still suppressing interest rates.

And once again your statements are overly simplistic and incomplete.

In order to control interest rates, the Fed sets the discount rate (the rate the Fed charges member banks for loans), the fed funds rate (the amt banks charge on loans to one another), can lower the supply of government and private debt outstanding by creating reserves to purchase government and mortgage debt (about $2 trillion net purchased in the last 4+ years), sets the interest rate it pays on excess bank reserves, alters the duration of outstanding Treasury debt (Operation Twist has been buying longer term Treasury debt and selling short term debt in order to reduce the supply of higher interest rate debt available), sets the interest rate it charges on currency swaps made to foreign central banks, among other tools.